The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, a summary of today's news; a look at the CIA's handling of pre- 9/11 intelligence about potential terrorists; a report on the use of prescription discount cards by seniors; an update of the Napster online music story; and some thoughts about what the Tony Awards say about the state of American theater.

NEWS SUMMARY

JIM LEHRER: The CIA faced scrutiny today about information it had on two of the September 11 hijackers, well before the attacks. "Newsweek" magazine was first to report the spy agency learned of the men back in January 2000. They had been in the capital of Malaysia, attending a meeting of suspected terrorists. The CIA did not tell immigration officials to look out for them until last August, when they were already in the United States. Today Republican Senator Richard Shelby of Alabama charged CIA Director George Tenet was "in denial" about intelligence failures. A White House spokesman cautioned against drawing any conclusions, before special congressional hearings this week. We'll have more on this story in a moment. India's defense minister played down concerns today about nuclear war with Pakistan. He said no sane individual would even consider using nuclear arms in the confrontation over Kashmir. The leaders of the two nations were in Kazakhstan today at an Asian security summit. We have a report from Vera Frankl of Associated Press Television News.

VERA FRANKL: A welcoming ceremony for Indian Prime Minister Bihari Vajpayee at Monday's summit, but despite the pomp and ceremony, Vajpayee was expected to come under intense pressure from other leaders to hold talks with Pakistan's president General Pervez Musharraf. Vajpayee has so far refused international entreaties to negotiate unless Musharraf ends cross-border terrorism in Kashmir. Musharraf, who arrived in Almaty later on Monday, insists he is cracking down on militants. Speaking to reporters after the official welcoming ceremony, Musharraf said his country wants to avoid war with India, and is ready for unconditional talks. Meanwhile, at least two people were killed in fighting in Kashmir on Monday. India says such militants are supported and funded by Pakistan, and that Pakistan even used to send them to Afghanistan for training in al-Qaida camps, a charge Pakistan denies.

JIM LEHRER: At the Asian summit, Russian President Putin was expected to try to mediate the dispute over Kashmir. Chinese President Jiang also planned meetings with both sides, hoping to ease tensions. In U.S. business news today, Napster filed for Chapter 11 bankruptcy protection. The Internet music-sharing service will sell its remaining assets to Bertelsmann, the German media giant. At its height three years ago, Napster had millions of users. That was before major record labels sued it for copyright violations. We'll have more on this story later in the program. Tyco International announced today its chief executive had resigned. It said Dennis Kozlowski left for "personal reasons." The "New York Times" reported he was under investigation for allegedly evading state sales taxes. The Manhattan District Attorney's office said only that a criminal inquiry was under way. Tyco is an international conglomerate, making electronics, security systems, and other products. Its stock plunged this year amid questions about accounting practices. On Wall Street today, investor doubts about corporate accounting helped trigger a sell-off. The Dow Jones Industrial Average fell 215 points, or 2.2%, to 9709. The NASDAQ Index was down 53, or 3.3%, to 1562. That's the lowest it's been this year. A former nurse was charged today with killing ten patients at a Veterans Affairs hospital in Columbia, Missouri. Richard Williams was arrested in St. Louis on ten counts of first-degree murder. In all, more than 40 people died under his care in 1992. A local prosecutor said new evidence came to light in recent months. "Thoroughly Modern Millie" led the way at the Tony Awards last night in New York city. The Broadway musical won six awards, including best musical and best actress. "Urinetown: The musical" picked up three Tonys. And Elaine Stritch won her first, for her one-woman show, "Elaine Stritch at Liberty." She'd been nominated four times since 1956. We'll have more on the Tonys at the end of the program tonight. Between now and then, the CIA's turn in the pre-9/11 spotlight; prescription discount cards; and music online.

FOCUS - FAILURE TO COMMUNICATE

JIM LEHRER: The CIA Story: Terence Smith begins.

TERENCE SMITH: "Newsweek" magazine first reported the story that the CIA Was slow to relay critical information about two of the 9/11 terrorist hijackers. Joining me is "Newsweek" bureau chief and co- author of the story, Daniel Klaidman.

Dan, welcome. How did the CIA get on these two?

DANIEL KLAIDMAN: Well, they got on to their trail in December 1999. They were monitoring a logistics center connected to al-Qaida in Yemen. They were monitoring phone calls to this logistics center which bin Laden's operatives were using to plan attacks. They hear about these two men - Nawaf Alhazmi and Kalid Almihdhar. They hear that they're planning to take a trip to Malaysia where they're going to attend some kind of a meeting. So the CIA thinks it's interesting. They enlist the special branch of the Malaysian government, their secret service, and ask them to monitor the meeting, to monitor these people, to put them under surveillance. And at that time, they conclude that this is likely a meeting of al-Qaida suspects, and they think it's important and interesting and they ask for more surveillance. The Malaysians turn over a report which concludes that these were possibly al-Qaida members, and then the important thing is the CIA then tracks one of these al-Qaida members or suspected al-Qaida members -- Nawaf Alhazmi - leaving Kualalalampour, traveling through Bangkok to the United States, to Los Angeles on January 15. The other thing they learn is that Kalid Almihdhar, his sidekick, had obtained a multiple entry visa so thathe could come and go to the United States as he pleased.

TERENCE SMITH: So they have these two clearly in their radar at this point. What happens then?

DANIEL KLAIDMAN: Well, what happens then is that the CIA essentially sits on the information. They never give the information to the FBI or to other law enforcement agencies. The problem with that is the CIA is not lawfully allowed to monitor these people in the United States. That's the job of the FBI so there was no chance at that point to continue to follow these people and to learn about them. What the FBI says is, had they been given the opportunity to follow and learn about the Alhazmi and Almihdhar, it is possible that they would have been able to learn about the 9/11 attacks. These two, they argue, would have led them to other collaborators in the 9/11 attacks and possibly allowed them to uncover it.

TERENCE SMITH: These two come back to the United States, come and live a... an open, documented life, as I understand it, from your story. They get what? Driver's licenses.

DANIEL KLAIDMAN: Absolutely. They live absolutely openly in the United States. They get driver's licenses and buy cars, which are put in their names. They have Social Security cards in their names. One of them even has his phone... his name and phone number in the phonebook.

TERENCE SMITH: This is in southern California.

DANIEL KLAIDMAN: This is in San Diego but the information is useless because the FBI Doesn't know about them.

TERENCE SMITH: And so take the story from there. What happens next, that causes it eventually to be known.

DANIEL KLAIDMAN: Well, a number of things happen. One thing that's interesting and important is that one of these two guys, Khalid Almihdhar, actually leaves the country in June of 2000. He leaves and he is out of the country for quite some time. He is planning to come back in July of 2001, a couple of months before the September 11 attacks, but his visa has expired. So he goes to the consulate in Saudi Arabia and a consular officer renews his visa. The consular officer has no idea that this person is a suspected member of a terrorist organization. There's no way he could have because the CIA hadn't passed along the information. So he gets his visa renewed and he returns. The other important thing that happens is in December of 2000, this is two months after the attack on the U.S.S. Cole, the CIA, as it's investigating the Cole attack, identifies a man by the name of Kalad, as the key architect of the attack. He is a known al-Qaida member and Kalad it turns out was a participant in this Kualalampour summit in Malaysia. As they're looking through their files, they learn that Kalad is pictured with Khalid Almihdhar, which all of a sudden sounds the alarm, Khalid Almihdhar clearly is important because he's meeting with the key architect of the U.S.S. Cole attack. What's baffling though and what we still don't understand is why at that point the CIA didn't say, "This is important. Let's turn this information over to the proper authorities, to the FBI, to the Immigration Service, to the State Department. Let's put them on the terrorist alert list."

TERENCE SMITH: Any explanation of that? Anything they've explained why it has not been done.

DANIEL KLAIDMAN: That is the $64,000 question. What the CIA had said was we didn't realize how important these two men were until that point, but at that point it's hard to understand why it didn't happen. I mean there are different possibilities. The congressional committees will clearly be looking into this.

One possibility is incompetence, the possibility that the information just got lost somewhere in the system. Other possibilities though there's no explanation, we don't know this for sure is that it had to do with bureaucratic rivalries of some sort.

TERENCE SMITH: Between the CIA And the FBI Particularly.

DANIEL KLAIDMAN: Yes.

TERENCE SMITH: Bring the story forward now to August of 2001, just the month before the September 11 attacks.

DANIEL KLAIDMAN: Well, what happens on August 23 is the CIA finally finds these names, realizes they're important, they put out an alert to the relevant law enforcement agencies, the FBI, Customs and also to the State Department, put them on the terror list. What prompted this? Well, if you'll recall in July and August, intelligence officials, law enforcement officials were very jittery because they suspected that bin Laden was planning some kind of attack, possibly even in the United States. President Bush gets his briefing on August 6 and so George Tenet asks his officers of the CIA to go back and scrub the files essentially, to review all of their files to see if perhaps there's some important evidence, information that would be useful to them and these names appear all of a sudden on August 23 an all points bulletin goes out and the FBI at this point has about two-and-a-half weeks to look for them. It's a big country. They've left the San Diego area. The FBI never finds them.

TERENCE SMITH: Dan Klaidman, thanks very much. It's quite a tale.

DANIEL KLAIDMAN: Thank you.

JIM LEHRER: And now some further perspective on this from former Senator Warren Rudman, a former Republican Senator from New Hampshire. He was a member of the Senate's Select Intelligence Committee and headed a commission that warned last year of a major terrorist attack on the United States and Robert Baer; he served 21 years as a case officer in the CIA Directorate of Operations. He recently wrote of those experiences in a book, "See no Evil: The True Story of a Ground Officer in the CIA's War on Terrorism." Mr. Baer, how important is this tale we just heard?

ROBERT BAER: I think it's the key to the investigation of who missed what. The fact that you had two terrorists with Attas in the same house and there was no follow-up in the United States, somebody dropped the ball along the way -- whether it was the FBI, the CIA, an individual, an organization, is going to be the main focus of the investigation at this point.

JIM LEHRER: How do you see it, Senator?

FORMER SEN. WARREN RUDMAN: Well, I see it in somewhat similar terms although I must say that, you know, it's a marvelously written story but they do have the advantage of hindsight. The problem we have is not too little information; it's too much information. At the time that this report was sent back to CIA headquarters, who knows what else was going on? I mean, these were two names of two people with one of many terrorist organizations. It probably stayed buried in the bowels of the analytical section and it wasn't until August they suddenly realized what they had. That is the problem with investigating these terrorist organizations. We have tons of information but we don't have the analytical skills yet to determine what's important and what isn't.

JIM LEHRER: You're nodding, Mr. Baer.

ROBERT BAER: I agree with him. It was missed because the information system at the CIA and the FBI are not coordinated; they're not put together. I'm not sure how this information was sent in from Malaysia, but if it went in a certain channel, it might not have been disseminated throughout the CIA even or the FBI. Remember the CIA is still reeling from Rick Aimes, the spy. And after that, they compartmented all their information.

JIM LEHRER: So nobody could get anybody else's, everything you need to know and worse, right?

ROBERT BAER: The CIA was on top of bin Laden with the system it had. We were suffering from Cold War problems of sharing information. We have to overcome this.

JIM LEHRER: The layman would say to both of you then what's the point of collecting the information if we haven't figured out a way to use it.

FORMER SEN. WARREN RUDMAN: Look, we collect every day thousands of bits of information, everything from terrorism to possible nuclear or biological threats, transnational crime. The problem is there is so much information from agents like this gentleman who did it for 20 years and from electronic intelligence that we have yet to find a way to take this information and put it into a form that the prioritization can happen. That is the problem.

JIM LEHRER: Why have we been unable yet to find a way, Senator?

FORMER SEN. WARREN RUDMAN: Well, it seems to me that this is not unlike everything else in life. It probably took September 11 to wake up the country, the government and the agencies that we've got to change the way we do business. By the way, I don't think this was a matter of rivalry. I've watched good sharing between the FBI and the CIA. I think it's a question of information not getting to the right people at the right time. It wouldn't be the first time.

JIM LEHRER: How do you read it? You read it as a rivalry problem or just --

ROBERT BAER: It's a rivalry problem because we can't get into FBI computers to follow these people. We don't know what the FBI did to follow up on this. If you read the article closely, it says that the CIA told the FBI, but apparently there wasn't a written message. That needs to be sorted out right away.

JIM LEHRER: In other words, they were told, they were just told orally by somebody.

ROBERT BAER: Yes.

JIM LEHRER: Some CIA guy told some FBI guy and nobody wrote it down.

ROBERT BAER: He said, look at this, you guys better take care of this. We don't know what happened at that point -- if that's the way things were. It may be an FBI problem at this point.

JIM LEHRER: Based on your experience, is that how things work? Could that have happened in this case? I know you don't know the facts but does that sound plausible to you?

ROBERT BAER: Yes. Let me explain the way it works. When we send messages in from the field you put what we call a slug line on there and it says where to send the message to. If that gets out of line it may go to the wrong office. Someone may get the message-- it's hard to believe I know. But they may get the message, I don't know what this is about and get rid of it. It's a glitch like that that we need to overcome that the committees need to look at, need to fix.

JIM LEHRER: Now do you think it can be fixed?

ROBERT BAER: Yes, I think it can be fixed.

JIM LEHRER: But there are thousands of people gathering millions of pieces of information. It would seem to me that somebody has to invent something new here. Am I wrong about that?

ROBERT BAER: No. You're absolutely right. First of all, we should look at this as a CIA success. Whoever was in Yemen that sent the original report to Kualalampour and from Kualalampour put the surveillance on these guys should get a medal at the CIA.

JIM LEHRER: Why?

FORMER SEN. WARREN RUDMAN: It wasn't the gathering of intelligence; it was the analyzing of the intelligence. That was where it broke down.

JIM LEHRER: Getting the information to --

ROBERT BAER: Somebody sat on the desk that didn't realize the significance of this, didn't have the experience. We don't have the analysts in the right place. But the CIA did do a good job in collecting this stuff. It was caught melding it with the FBI.

JIM LEHRER: Senator, what do you say about this idea? Now we know about all of this, should we go even further in finding out who it was-- if it's a who-- or if it's a system or whatever, where were the mistakes made? Do you see that as an unpatriotic thing to do at this point?

FORMER SEN. WARREN RUDMAN: I think if it's handled responsibly-- and I have great faith in the leadership of the two committees on the Hill-- they ought to find out specifically the track of that information, how it got into the agency and how it was disseminated. There may be things about this that the "Newsweek" reporters as intrepid as they are don't know and that the Congress will learn. But let me just make an observation. One of the real problems with all of these kinds of stories is the American people may come to the conclusion, if we get everybody with IQ's of 180 at the CIA and the FBI and somehow we spend billions of dollars on new artificial intelligence computers, we'll be able to prevent all acts of terrorism. We won't. That is not the way it works. We are never going to be able to prevent all acts of terrorism. I told your producer this afternoon in baseball, if you batted 500, you'd be in the hall of fame your first year. In intelligence if you bat 750, you lose. And that's what people ought to understand that intelligence is not going to solve our problem.

JIM LEHRER: What do you make of Mr. Baer's point a while ago, that the CIA operative who found out this information deserves a medal.

FORMER SEN. WARREN RUDMAN: I agree totally. These people do this at great risk. They have to go to places where they are in danger. They find out the information, they send it back. But, Jim, on the day that this information came back to CIA headquarters it was one of thousands of reports that came in from the field. What we have to now do in the field of counter terrorism is find a way to make sure that that is gathered in one place and that's important.

JIM LEHRER: Mr. Baer, your former boss, George Tenet, was accused today by Senator Shelby of-- a ranking member of the Senate Intelligence Committee-- of being in denial about all of this. How do you read that?

ROBERT BAER: I think he's defensive. He's got to be defensive at this point. But he cannot come out in public and say, listen, there's parts of the system that are broke everyone, have been broken for years. It's too complicated for me to explain to you and blah, blah, blah.

JIM LEHRER: Why can't he do that?

ROBERT BAER: I think that the intelligence matters should be kept secret in an investigation like this. I think a blue ribbon commission should look at it, then come out and say what it can say. This should not be fought in a battle day by day in the media in the public. We don't know what happened on these two guys that got into the United States. We don't know why it fell between the cracks. I think we should wait and pass judgment on George Tenet and the CIA until we know this.

JIM LEHRER: You don't think we should be reading it in "Newsweek"?

ROBERT BAER: No.

JIM LEHRER: How do you think... you heard what Dan Klaidman just went through the whole thing. You've read the piece.

ROBERT BAER: It's a fantastic piece.

JIM LEHRER: It's a fantastic piece. You must have thought the same thing and everybody else, where in the world, what kind of leak must this have come from.

FORMER SEN. WARREN RUDMAN: I don't think that's too difficult to figure out.

JIM LEHRER: Help me.

FORMER SEN. WARREN RUDMAN: There are people in the FBI who are very angry at people in the CIA for not getting information to them more rapidly. They've been on the point of the sword for the last week for fouling up. If you read it, you can almost read that somebody within the FBI Told them this story.

ROBERT BAER: Somebody got the chronology, picked out the point of this information was available in January 2000 and ran with it and leaked it. I don't think that's where we want to be is fighting this in the public. I really don't. I think it's a mistake.

JIM LEHRER: That's an awful place to be. So it was the FBI's week to be on the griddle last week. Now it's the CIA's.

ROBERT BAER: You can only suspect the worst.

JIM LEHRER: Now what happens? What does the CIA do to protect itself from this?

FORMER SEN. WARREN RUDMAN: I hope nothing. I think that George Tenet has to take this on the chin. He's a very competent guy. He's done a lot to improve the agency. We've got a long way to go. This country is finally coming to the realization that in the open society that we live in, it is becoming very difficult to protect ourselves against the kind of terrorism that we inevitably are going to face. And to try to just assess blame on people and to make the conclusion that somehow had this information got to the right place we could have prevented the 11th, that is a long leap.

JIM LEHRER: But we're in a blame game. We're right in middle of it. That's what we're talking about now. How do you end the blame game, Mr. Baer?

ROBERT BAER: It's the system is broken. The fact is if the FBI had been notified that these 19 people were potential terrorists, at the end of the Newsweek article it says very clearly, the best we could have done is follow them to the Boston Airport or to Newark or Washington, or Dulles and called up the FBI offices at the other end. I mean what does that get us? We don't have the system to fight terrorism right now. We have to make a decision what we're going to do -- what authority we're going to give the CIA and the FBI; it's a new game.

JIM LEHRER: You used the term blue ribbon committee. The Senator is using the existing committee.

FORMER SEN. WARREN RUDMAN: Or both.

JIM LEHRER: Or both. Do you have any strong feeling Mr. Baer about whether it should be a blue ribbon committee.

ROBERT BAER: Blue ribbon. It's too big of an issue.

JIM LEHRER: Get it out of Congress.

ROBERT BAER: We have to regain the trust of the American people and do it by senior politicians, senior academics whoever is trusted in the United States to look at it closely and get it off the Hill.

JIM LEHRER: Get it off the Hill?

FORMER SEN. WARREN RUDMAN: I would not have said that up until a couple of days ago but I am very concerned with these attacks on various members of the FBI and the CIA They don't need that right now. Everybody has tried very hard to get this thing strayed straightened out. If we want to have a blame game in these hearings, then we are not going to have very productive hearings.

JIM LEHRER: You smell that coming?

FORMER SEN. WARREN RUDMAN: Well I saw inklings of it in the last couple days. If Senator Gramm and Shelby and Porter Goss and Nancy Pelosi decide to find out the facts and not get involved in a scapegoating contest, then these hearings can be very useful.

JIM LEHRER: You've of course been involved in this.

FORMER SEN. WARREN RUDMAN: I have.

JIM LEHRER: You have been involved in everything. You've been involved in Senate hearings; you've also been on the outside as well.

FORMER SEN. WARREN RUDMAN: I have.

JIM LEHRER: Which is the most effective?

FORMER SEN. WARREN RUDMAN: I think the blue ribbon commission would have the one advantage of no partisanship whatsoever. I think that would be the single advantage. Believe me, they can pull that off if they want to. The question is how badly do they want to? Only time will tell. Those hearings are going forward. The question is: will they be useful to the country?

JIM LEHRER: Speaking from our past experience from the inside and whether it's Congress or somebody else investigating your work or your kind of work, where do you think your folks would have a better chance of getting a fair shake?

ROBERT BAER: Blue ribbon commission.

JIM LEHRER: Blue ribbon commission.

ROBERT BAER: Yeah, we don't want to decide it's one agency's fault and rip it apart because we'll be a lot worse off at that point than we were before September 11th.

FORMER SEN. WARREN RUDMAN: I mean, when you get to the point where Bob Mueller who took over the FBI the day before, I believe, September 11, is now being assaulted by various people around the country in the media and in the government for somehow letting the country down, I mean that is the height of absurdity. We don't need this at the time when our focus ought to be on protecting the American people from a reoccurrence. That's where our focus ought to be.

JIM LEHRER: Thank you, gentlemen.

FOCUS - CUTTING COSTS

JIM LEHRER: Still to come on the NewsHour tonight, discounting drugs, online music, and the Tony's. The prescription drug story is reported by Susan Dentzer of our health unit, a partnership with the Henry J. Kaiser Family Foundation.

SUSAN DENTZER: It's no secret that many senior citizens are having trouble paying out of pocket for their prescription drugs, but some like Alvin and Ruth Shapiro are feeling far more than a slight pinch.

ALVIN SHAPIRO: Drugs are eating me up. Between me and Ruth, we're just in bad physical shape, and the tremendous burden of shopping and calling up and "where is it cheaper?" and "where is it not cheaper?" and "stay away from this drugstore," and "go to this pharmacy," it's a terrible drain really.

SUSAN DENTZER: Both this their early 80s, the Shapiros are in such poor health that a list of their ailments could practically fill a medical encyclopedia. And there's the long list of drugs they take regularly, including Ambien for insomnia, Singulaire for Ruth's asthma, Lipitor for to lower cholesterol. It all adds up to more than two dozen drugs at an astounding cost of $16,000 a year. That's well over half of the annual income they draw from Social Security and their retirement savings.

ALVIN SHAPIRO: I'm not poverty-stricken, but I might be pretty soon.

SUSAN DENTZER: The situation isn't much better for Penny DeRose. She's a 71-year-old travel agent whose income plummeted after September 11.

PENNY DeROSE: I was making around $26,000 a year. Now I make, if I'm really lucky, $600 for the month.

SUSAN DENTZER: DeRose spent much of her youth as a showgirl in Las Vegas. Today she's battling diabetes and a number of other complications. As a result, she spends more than $6,000 a year on prescription drugs, or about 40% of what she gets from her job and her Social Security checks. She's devised various ways of scraping by.

PENNY DeROSE: I just picked up, like, four prescriptions yesterday, but I couldn't get them on supply. I got 15 pills of this and 15 pills of that. 30 pills of this, like something I take 60 a month. So I got half.

ALVIN SHAPIRO: Are you going to take care of me?

SUSAN DENTZER: It's no wonder that the Shapiros, DeRose, and similarly placed seniors want to see the federal Medicare program expanded to pick up much of the cost of out-patient prescription drugs, but Congress is still mired in debate over enacting a drug coverage plan. So in the interim, millions are turning to another option: Using prescription drug discount cards. Leaf through a newspaper or flip on the television nowadays and you'll probably see advertisements for these cards.

COMMERCIAL SPOKESMAN: Attention: People without prescription plans, including those on Medicare, now you can get the best price on your prescriptions with The People's Prescription Plan. Average savings with this valuable plan are $36 a month.

SUSAN DENTZER: For fees ranging anywhere from about $15 to $100 a year, the cards offer discounts off the typical retail price for a prescription. Those discounts can range from just a few cents per prescription to as high as 10% to 20%. The sponsors of the cards can offer those price breaks because they pool together the purchasing power of lots of customers. As a result, they're able to negotiate lower dispensing fees from pharmacies and sometimes lower drug prices from pharmaceutical manufacturers. Tricia Newman, a Washington health policy analyst for the Henry J. Kaiser Family Foundation, recently co-authored a study of the cards.

TRICIA NEUMAN, Henry J. Kaiser Family Foundation: These cards are offered by a variety of organizations. Probably the main sponsor is what's called pharmacy benefit managers. These are businesses that pool together resources. They negotiate with pharmaceutical companies, and they sort of consolidated the middleman to offer benefits through discount card programs.

SUSAN DENTZER: In recent months, major pharmaceutical companies like Pfizer and Merck have also brought out cards that offer seniors discounts on the medications those companies produce. And this summer together RX, a discount card offered by eight pharmaceutical companies, is scheduled to make its debut. Amid the variety of card options now available we wonder just how much help they could provide people who incur big charges for prescription drugs, so we took lists of the medications taken by the Shapiros and by Penny DeRose to independent health policy consultant Michael Hash. Working with the Kaiser Foundation's Christina Hanson, hash and his colleagues produced an analysis. Since there are far too many discount cards on the market to examine all the options, they take several of the most promising ones.

MICHAEL HASH, Health Policy Consultant: First, we selected three discount card programs, each of which had a mail order and a retail pharmacy access program and also one Internet pharmacy.

SUSAN DENTZER: Hash says that determining the potential savings was enormously time consuming and would be for seniors.

MICHAEL HASH: Just the seven options that we looked at took a good bit of time because you have to make sure you're pricing the products comparably, you have the right strength information, the right quantity information, and of course prices are subject to change without notice.

SUSAN DENTZER: Even so, Hash's analysis showed that discount card programs could produce a reasonable amount of savings.

MICHAEL HASH: Mr. and Mrs. Shapiro are currently spending about $16,000 a year for the drugs that they're taking. What we found in the seven options we looked is that from any one option, the best they could do would give them savings of about 5% over what they're currently spending or a range of a low of about $50 if they bought directly from an Internet pharmacy to a high of about $800 if they bought from one of the cards that produced the best savings for them.

SUSAN DENTZER: And if the Shapiros use several discount card and mail order options to get the best prices on each of their drugs, they could save as much as $1,700 a year. As for DeRose, her savings could be substantial, too. One card Hash analyzed could save DeRose a total of 8%, or about $500 a year.

MICHAEL HASH: Now if she were willing to enroll in multiple cards, in fact, in two card programs, she could increase her annual savings from 8% to 10%, or to a little over $600 a year.

SUSAN DENTZER: When we showed those figures to Penny DeRose, she was impressed.

PEGGY DeROSE: You know what it means? It means that I might be able to take all of the medications I'm supposed to take instead of just the ones I can pay for this month.

SUSAN DENTZER: Alvin Shapiro was also impressed with the potential savings of $1,700 a year.

ALVIN SHAPIRO: That's... that's a goodly amount. That's a goodly amount. I would go out of my way to the extent that I could, considering all of these problems that I have, to do something about this and try to pick up some of that volume. Even if it were only $1,000, it would be worth it.

SUSAN DENTZER: In fact, the Bush administration has concluded the discount cards are such a good idea that Medicare should put its own seal of approval on some of them. That could enable all 39 million of the programs' enrollees to get even bigger drug discounts through a series of cards sponsored by private groups or companies that agree to meet criteria spelled out by the government. Tom Scully administers the Medicare program.

TOM SCULLY, Centers for Medicare & Medicaid Services: What can happen now in the seniors population is they get six cards in their wallet and they're splintered. So the basic idea was to use the power of Medicare's trust with seniors and the power of our 39 million seniors to get the market leverage to get discounts. It makes a lot of sense, I think. The best way is to organize, you know, 500,000 seniors in New York and 200,000 in Philadelphia and 100,000 in Washington, you know, to get them in a cooperative and go to the drug company and say, "we're all here to buy in a group and we want to a discount."

SUSAN DENTZER: There's just one problem. For now, the proposal for Medicare-endorsed cards is tied up here in federal district court in Washington. That's the result of a lawsuit brought by chain drugstores, the fear that deep discounts on drug-dispensing fees will eat into their profits. The government is fighting the lawsuit. But as a hedge against losing a case, Scully is also lobbying Congress for legislation that would allow the administration to put the Medicare card plan into effect. Tricia Neuman of the Kaiser foundation says that Medicare- backed discount cards may be seniors' best hope for short- term relief, in light of the congressional stalemate over a Medicare drug benefit.

TRICIA NEUMAN: People are so eager to get some form of help that 10% or 8% or whatever it is they can get is something, and something is certainly better than nothing.

SUSAN DENTZER: But for now millions of seniors like Alvin Shapiro may have to swallow high drug costs for a while longer.

UPDATE - ONLINE MUSIC

JIM LEHRER: Now, Napster and the world of online music: Margaret Warner has the story.

MARGARET WARNER: Early last year, Napster was a cultural phenomenon. Nearly 60 million people used the site to swap music files from each others' computers for free. But the record companies sued Napster for copyright infringement, and the courts forced it to suspend its operations last March. Today Napster filed for bankruptcy. For more on that and the state of the online music business, we're joined by P.J. McNealy, media department research director for Gartner G2, a technology research consulting firm in California.

Welcome, Mr. McNealy. So tell us, was it the court rulings that drove Napster into bankruptcy?

P.J. McNEALY, Gartner G2: Well Napster drove in essence itself into bankruptcy by building a business model based on the intellectual property, the copyrights, in this case, the music industry, building their business on their copyrights without really launching a legitimate music service.

MARGARET WARNER: In its heyday when it had these 60 million users when it didn't face lawsuits, was it making money? If people were downloading for free, how did it make money?

P.J. McNEALY: Sure. Napster actually wasn't making any money. That's one of the problems. They didn't have any sources of revenue because they didn't charge for their software that you downloaded. And there was no advertising revenue from traffic on their site, which was a problem because when they got sued, there was no revenues to recoup unless a new Napster was launched after the lawsuit got settled.

MARGARET WARNER: So once the record companies went after Napster, did that end this kind of illegal music sharing, this pirated music sharing on the Internet?

P.J. McNEALY: No. Actually not at all. There's a near theory out there that piracy will be eradicated and no one will ever share a music file. But that's really a pipe dream for getting the Internet under control. What we've seen from piracy is that after Napster became popular and shut down that people went to other music-sharing software, such as Line Wire, Morpheus, Nutella, Music City, things like that. What we've seen is that while Napster started in the United States and got sued, we saw some file sharing services open up in Europe and got sued and then got shut down. Now the eyes of the music industry are really looking toward Asia Pacific where intellectual property is more difficult to protect and hoping that more file sharing services don't pop up over there.

MARGARET WARNER: I gather though that the record companies have tried to set up their own music. It's not sharing because they want people to pay a fee but a sort of competing service where they would actually protect their copyright and make money?

P.J. McNEALY: Sure. We've seen two music services that have been launched in the past year called Musicnet and Pressplay. They're both partially or wholly owned by the five record labels. And these are services where you can pay a monthly fee and download some songs and stream quite a bit. What we've seen is that, a, they're still competing against free, which means their service where they want you to pay money for it has to be pretty compelling. And b, we've seen the consumers really like some of the benefits they saw with Napster meaning when you got a file, a music file from Napster, you could burn it to a CD and bring it into your car or you could move it on to an MP-3 player or take it with you. What we're seeing from these music services is you can't really do much of that. You can pretty much listen to it only on your desktop or at your PC, so consumers are not screaming with their credit cards to buy music at this point.

MARGARET WARNER: How are they doing?

P.J. McNEALY: They've been very, very reticent to talk about numbers. We're taking that to be a strong indication that they're not happy about them. Pressplay has said they may talk about subscribers in the second half of this year but we'll wait and see. We're really seeing there's a bigger issue here not just subscriber numbers but the music labels in order to get more subscriber numbers and big subscriber numbers, the music labels have to change some of the ways they've done business. They need to embrace selling digital music files over the Internet and come up with more creative licenses as they're called to allow people to sell a song that allows you to then burn it to a CD or move it to a hand held player.

MARGARET WARNER: Back to Napster. If the state of on-line music sharing particularly pirated music sharing is so bleak why does the big German media company Bertelsmann want to buy Napster?

P.J. McNEALY: That's a very popular question. Why would Bertelsmann spend more money on Napster at this point? Two things here. Well, three things. One Bertelsmann has spent $91 million investing in Napster and added another $8 million to pay off their initial investors two weeks ago. So, they have a lot of money invested in it. Two, they think that the Napster brand, the name Napster still resonates with music fans and that they can launch a new service and when they launch a new service, everybody who loved the old Napster will come over and pay in the new Napster world. And the third thing is that they believe that Napster has some fundamental technology. They have a software program that is compelling that allows people to easily trade music, find new music, do it securely so that artists still get paid for their music files and that they will be able to somewhere down the road re-launch a service launching this new technology.

MARGARET WARNER: Does all of this have wider implications for instance for downloading movies and the fear of that becoming a big enterprise?

P.J. McNEALY: Absolutely. There's a real fear of anybody who wants to sell any kind of digital content over the Internet whether selling a movie or a music file or things of that nature. No matter what they try to sell they'll always be competing against free and some of the file sharing services. That's true. But at we're really seeing now is that the movie industry is getting nervous and it's been nervous now for a couple of years. But while you can easily download a music file using a dial-up connection over the Internet, you can't easily download a movie because the size of that file to download a whole movie is very, very difficult and time consuming and something that the average PC user, average person on the Internet won't stand for. But as more and more households get broadband, the easier that becomes. And the easier that becomes, the more nervous the music... the movie industry really starts to get worried that people will stop going to theaters and they'll just be downloading movies for free either to watch on a home network or the PC. We've seen this fear just from the attack of the clones.

MARGARET WARNER: We have to leave it there but thank you so much.

P.J. McNEALY: Thanks for having me.

FINALLY- STAGE SCENE

JIM LEHRER: Finally tonight, a Broadway celebration, and to Gwen Ifill.

GWEN IFILL: Last night's Tony awards were a study in contrasts. The big winner: An extravagant musical reinvention of an old Julie Andrews movie.

MARY TYLER MOORE: And the 2002 Tony Award for best new musical goes to "Thoroughly Modern Millie."

GWEN IFILL: "Thoroughly Modern Millie," an old-fashioned story of a small-town girl in the big city, won six Tonys, including best musical, and best actress for newcomer Sutton Foster.

SUTTON FOSTER: To say that this is a dream come true is an understatement. I could not be more honored to be a part of this show. It is truly a thrill to work with this incredible company every night. I want to personally thank the entire creative staff and the producers for trusting their work to take a risk on hiring me.

GWEN IFILL: The runner-up in the musical category was "Urinetown," a satire with an unlikely title, that got its start on the lower east side of Manhattan.

SPOKESPERSON: Tony goes to "Urinetown: The Musical."

GWEN IFILL: "Urinetown," a spoof about a town which bans the use of private restrooms, won for best book of a musical, best direction, and best original score.

JOHN RANDO: I have to thank my extraordinary cast. They were there from the beginning, way down in the trenches. They all shared the same dressing room, all 16 of them-- the same toilet, which is very fitting for our show.

GWEN IFILL: Unlike last year's box office and critical phenomenon, "The Producers," no single production swept this year's Tonys. Instead, 11 shows shared the awards. Almost 40 years after winning his first Tony for "Who's Afraid of Virginia Woolf," Edward Albee won his second last night, for the drama "The Goat or Who is Sylvia," beating out Pulitzer Prize-winner Suzan Lori Parks' entry, "Top Dog/Underdog." Mary Zimmerman won the Tony for play direction for "Metamorphoses," a retelling of the stories of King Midas, Hermes, and Orpheus. Broadway theater took a hit after the September 11 attacks. Attendance was down 8% in 2001. But revenue was down less than 4%, in part because tickets cost more.

GWEN IFILL: So was Broadway's big night a reflection on the state of the American theater? For answers and opinions, we turn to two theater vets: Carey Perloff, the artistic director of the American conservatory theater in San Francisco, and playwright Wendy Wasserstein. She won a Tony and a Pulitzer prize in 1989 for her play, "The Heidi Chronicles." Welcome, women.

What if anything... I'll start with you, Wendy Wasserstein, did last night's Tony awards have to do with the state of American theater, but the state of Broadway especially, right now?

WENDY WASSERSTEIN: Well, I think in the way that so many of the Tony winners actually had honed their skills not on Broadway. Someone like the director Mary Zimmerman has worked in Chicago for years. The writers of "Urinetown" worked, you know, on the lower east side. I think many of the people who go on to win Tony awards, in fact, have worked in the lively American theater across the country, including Carey Perloff.

GWEN IFILL: Well, Carey Perloff, there were all piece revivals and musicals turned into musicals, like the "Thoroughly Modern Millie," which made such a good splash last night. What does that tell us about the state of Broadway right now?

CAREY PERLOFF: Well, it's a cautious moment because we're in an economically troubled time in this country. I think the first thing we should say is it's thrilling that given the trauma in the country this year that we were able to come together and celebrate the theater last night and that the theater has survived and it's flourishing and is providing a place in this country for people to come together. And that was very heartening to me. There will always be more traditional material, or safer material, than cutting-edge material by the time it gets to the level of Broadway, but I would reiterate what Wendy said, that there were some great surprises that Edward Albee was there with a radical play like "The Goat." That "Urinetown" is such a lively and unpredictable show, and that it made it not only to Broadway but to the Tonys I think is a very hopeful sign.

GWEN IFILL: But "Urinetown" which you pointed out, which is kind of offbeat, to put it mildly, didn't hold a candle in the end to the very traditional "Thoroughly Modern Millie." What did you think of the fact of....

CAREY PERLOFF: That's not true. It won... look, it won the best book, the best music, and the best director, so how it could not win the best musical is a little peculiar, but that's the way that voting goes. You know, I think that people are excited about two very different kinds of shows, you know, one much more traditional and more appealing probably to certain constituents and one that represents the new, I think.

GWEN IFILL: Wendy Wasserstein, you're a New Yorker, how did Broadway theater rebound, or did it rebound, after September 11?

WENDY WASSERSTEIN: I actually think it's truly rebounded because I'm a Tony voter so I spent the past weeks going to the Broadway theater. And actually the audiences there have seemed very excited about, you know, very different things. Sitting in the audience of "Private Lives" last week, for many of those people, it was the first time they had ever seen that play, and they were, you know, thrilled with it, clapping in between the scenes. And I thought that was remarkably healthy. And I felt that same way seeing "The Crucible" and even seeing Edward Albee's play "The Goat." Afterwards I heard people talking about it. I mean, I think at issue here is, you know, "where are the new plays? How many new plays are being done on Broadway? How many new musicals there are." A lot of revivals. But the atmosphere is one-- I agree with Carey-- there's an upness to it and I think there's a joy in coming together, in rediscovering that sort of communal effect the theater has.

GWEN IFILL: Well, help us with your own question.

CAREY PERLOFF: I also think...

GWEN IFILL: One second, Carey. I'll be with you in a second. Where are the new plays, Wendy?

WENDY WASSERSTEIN: I think the new plays... I don't know any playwright who writes a play specifically for Broadway. I mean, maybe Neil Simon, but in terms of the next generations of playwrights, they were all done at the regional theater at the off Broadway theater, at the non-for-profit theater. They are developed in places that specifically nurture new writing. Then along the road, maybe one or two of them lands up on Broadway, but that doesn't ten to be the norm.

GWEN IFILL: Carey Perloff, you wanted to jump in.

CAREY PERLOFF: One of the things I think that was exciting about watching the awards last night is to see new talent emerge on the acting front as well, like Sutton Foster who was an understudy in "Thoroughly Modern Millie" and got her chance. And I think that's always a sort of glorious moment in the theater when artists can breakthrough. I think, as Wendy said, in terms of playwrights, it's really important to nurture writers in communities that are accustomed to new work over a long period of time so that those works can actually breathe before they're sent into the marketplace.

GWEN IFILL: You can take this chance to plug yourself if you like, but where are those communities where this kind of new work is taking place?

CAREY PERLOFF: Oh, I think there are fertile communities all over. I think Seattle is one. We do a lot of new work in San Francisco. There's new work happening in Los Angeles, in Chicago, in Dallas, in Hartford, in Providence, you know, particularly in theaters that are also attached to playwriting programs or that have theater labs somewhere attached to them. Every theater has its sort of cadre of writers about whom it's particularly passionate. And I think if you travel around the country, what's interesting about the ecology of the American theater is how particular it is from community to community. Depending on what the gestalt of that community is, you'll see either much more scripted new work or there are communities in which the theater is more ensemble-based and less based on plays particularly. But I think, you know, Broadway represents just one aspect of a very fertile, broad ecology in the American theater.

GWEN IFILL: Well, Wendy Wasserstein, respond to that. What is your take on the ecology of the American theater?

WENDY WASSERSTEIN: Well, I think even if you look at last night's awards, as I said, Mary Zimmerman worked in Chicago. "Metamorphosis" was done at the Second Stage Theater, a small off-Broadway theater. Suzanne Lori Parks, who won the Pulitzer, has worked at the public theater with George Wolf for years. I mean, I think that you have to look at these relationships and artists across the country in various... in the large regional theaters and in the smaller theaters as well. Plays take time. Plays need to be nurtured, but I think what's very true is there is a yearning, not only to be in the community, but also to have that experience of an individual's voice hitting you, that it's not something that processed in a way. Playwrighting and the theater is still an art form, and therefore, it has... it works in a very distinct way.

GWEN IFILL: Is there a financial disincentive -- I'm going to stay with you a minute, Wendy -- is there a financial disincentive to risk taking on Broadway or in theater or in any other city?

WENDY WASSERSTEIN: There is in a way. I was thinking about, there was once a workshop of a play of mine "An American Daughter" at the Seattle Rep. And for $5 you could have come to city Meryl Streep and Julianne Moore and Liev Schreiber, and Adam Arkin in a reading of that play. And it wasn't even a big deal. In Seattle, it wasn't a big event or anything. It was just a reading of a play. I think in that... that's very hard to happen in New York. That's much easier in towns across the country.

GWEN IFILL: Carey Perloff, there has been some criticism, at least among the critical glitterati in New York, about "Thoroughly Modern Millie" and about the great big popular musicals which walk away with awards so often. Last year there was the same criticism of "42nd street," as I recall. Where is the creative work that's going to happen that's going to revive Broadway to original work, or does that even have to happen?

CAREY PERLOFF: Well, you know, there are artists bubbling up all over the place who right now wouldn't think of and perhaps will never think of Broadway as being their outlet. I was just at a big theater communications group conference in Portland, the subject of which was new work. And literally the mention of Broadway never came up, and this was 150 theater professionals from all over the country developing a very wide range of very interesting work. For example, my theater just developed a new music theater piece with David Lang, the composer of the "Bangin' a Can" music festival in New York, and Mac Wellman, who's one of the most important avant-garde playwrights downtown in New York, created a new music theater piece which we're going to tour. And Broadway is absolutely not its destination. It's not that kind of piece, but it was a piece that was thrilling and very important for this community and I think will be important in Europe and in communities around the country. So I think there are many ways that new work can flourish. Broadway is one destination, but what I'm finding in the theater now is there are a lot of younger artists for whom Broadway is not necessarily the destination they're seeking.

GWEN IFILL: Okay. Well, the theater then is alive and well. Carey Perloff and Wendy Wasserstein, thank you very much for joining us.

RECAP

JIM LEHRER: Again, the major developments of the day: The CIA faced scrutiny about information it had on two of the September 11 hijackers, well before the attacks. And India's defense minister played down concerns about nuclear war with Pakistan. We'll see you online and again here tomorrow evening. I'm Jim Lehrer. Thank you, and good night.